U.S. Top for Innovation Quality in WIPO Report

On July 1, 2013, the World Intellectual Property Organization (WIPO) and Cornell University released the 2013 Global Innovation Index (GII 2013). This year, the United States moved up to 5th (from 10th in 2012) and the United Kingdom also moved up to 3rd (from 5th in 2012). Switzerland remained 1st, with Sweden remaining 2nd in the rankings.

The GII 2013 looked at 142 economies around the world, using 84 indicators, including the quality of top universities, availability of microfinance, venture capital deals – gauging both innovation capabilities and measurable results.

The message from the report: “Despite the economic crisis, innovation is alive and well. Research and development spending levels are surpassing 2008 levels in most countries and successful local hubs are thriving.” Indeed, despite tightened budget policies, R&D expenditures have grown since 2010. The R&D expenditures of top 1,000 R&D-spending companies grew between 9 and 10 % in 2010 and 2011. A similar pattern was observed in 2012.

Interestingly, the report shows that R&D expenditures are growing faster in 2012 in emerging markets than high-income countries. Over the last five years, China, Argentina, Brazil, Poland, India, Russia, Turkey and South Africa (in that order) have been at the forefront of this phenomenon. Emerging markets, and notably China, are also largely driving the growth in patent filings worldwide.

The GII 2013 also shows striking stability among the most innovative nations. Whether you look at the top 10 or top 25 innovators in the world, GII rankings show that that while individual countries may swap their respective rankings within these groups, not a single country moved into or out of either the top 10 or the top 25 in 2013.

Each of the top 31 countries on the GII 2013 were categorized as High Income countries, with 40 of the top 50 being High Income countries. There were 9 countries in the top 50 that were Upper-Middle Income countries (Malaysia #32, Latvia #33, China #35, Costa Rica #39, Lithuania #40, Bulgaria #41, Montenegro #44, Chile #46 and Romania #48) and only a single Lower-Middle Income country (Moldova, #45) made the top 50. Categories of GDP per capita follow the World Bank 2012 classification: Low Income = $1,025 or less; Lower-Middle Income = $1,026 to $4,035; Upper-Middle Income = $4,036 to $12,475; High Income = $12,476 or more.

Perhaps most interesting is a new metric for the GII 2013 report, which aims to rank countries based on quality of innovation. To do this, the report looked at three separate metrics: (1) university ranking average of the top three universities in each country; (2) the number of patent families filed in at least three different Patent Offices; and (3) the number of scientific journal articles published in a given country. The report explains that it is believed that these three metrics provide a good quantitative indicator of scientific output. In this ranking, the United States came out on top, largely thanks to the University and scientific journal articles component. In terms of quality innovation the U.S. came in ahead of the United Kingdom (#2), Germany (#3), Japan (#4) and Switzerland (#5).

Also interesting, although not surprising, is how the most troubled countries and regions fared in these rankings. Sub-Saharan Africa and Northern Africa/Western Asia dominated the bottom of the rankings. Sudan came in last at #142, Algeria #141, Syria #140, Yemen #139, Nicaragua #138, Rwanda #121, Iran #120, Zimbabwe #116, Pakistan #113 and Egypt #112. Thus, it would seem that political turmoil and an environment not particularly friendly for foreign investment is a recipe for little to no serious domestic innovation.

“The results of the GII provide testimony to the global nature of innovation today. The top 25 ranked countries on the GII are a mix of nations from across the world – North America, Europe, Asia, Oceania and the Middle East. While high income economies dominate the list, several new players have increased their innovation capabilities and outputs. On average, high-income countries outpace developing countries by a wide margin across the board in terms of scores; a persistent innovation divide exists,” explained Mr. Soumitra Dutta, co-editor of the report and dean of the Samuel Curtis Johnson Graduate School of Management, Cornell University.

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